What Happens to HY Credit Spread (OAS) When Fear & Greed Index Hits Extreme Greed?
Extreme greed readings signal euphoria and contrarian sell signals. What happens when sentiment indicators hit maximum optimism?
How HY Credit Spread (OAS) Responds
Scenario Background
The CNN Fear & Greed Index and similar composite sentiment indicators combine multiple market-based metrics (VIX, put-call ratios, junk bond demand, stock momentum, market breadth, safe-haven demand) into a 0-100 score. Values above 75 represent "extreme greed," signaling complacency, euphoric positioning, and contrarian sell signals.
Read full scenario analysis →Historical Context
CNN Fear & Greed historical extreme greed periods include: January-February 2018 (Volmageddon before), Q4 2019 (before COVID), February 2020 (peak before COVID crash), most of 2021 (post-pandemic euphoria), mid-2024 (AI rally peak), and late 2024 (post-election greed). Each episode was followed by 5-15% drawdowns within 3-6 months. The January 2018 extreme greed at 83 preceded a 10% correction in early February. The February 2020 extreme greed at 75 preceded the 34% COVID crash. The 2021 persist...
What to Watch For
- •VIX rising above 15 from suppressed levels
- •Put-call ratio rising above 0.9
- •Market breadth deteriorating (fewer stocks above 200-day MA)
- •Bearish AAII readings rising above historical average
- •Margin-debt-to-market-cap ratio above 2%
Other Assets When Fear & Greed Index Hits Extreme Greed
Other Scenarios Affecting HY Credit Spread (OAS)
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